Could GM's IT insourcing help decide the election?

Summary:General Motors thrives once more and continues to draw outsourced jobs back in-house. While the outsourcing trend reverses across U.S. industries, GM's move during an election year could help secure the presidency, in spite of the occasional false political rhetoric.

"What's good for General Motors is good for the country."

It's probably not a coincidence, therefore, that during the height of the global financial crisis, GM was a hair's breadth away from collapsing. Now the car making giant is clawing back its outsourced employee base in a bid to create more than in-house 10,000 jobs in the U.S. 

Since GM's near-demise, let's nutshell the past few years:

  • Employment, after a tricky time during the recession, is growing marginally month-on-month;
  • Tens of millions of U.S. residents can now afford vastly-overcharged healthcare thanks to Obamacare (PPACA), even if some commentators claim it's socialist, communist, or "insert word here but don't forget to mention Soviet Russia";
  • Oh, bin Laden is dead. (That one's my favorite.) 

Above all else, the most crucial element to this election, above most other things, is the economy. But the economy rests on jobs and employment. American jobs for American people. Any presidential candidate can promise you that, but it doesn't really work in principle. Tax cuts, financial incentives, that's all good and well.

But it just isn't as simple as that.

Industries outsource by very nature -- it has to maintain momentum and growth in other areas -- but the trend is reversing and other major U.S.-based companies are starting to reinvest back at home where they were founded. 

GM is a fine example. A pillar of American industry, a market cap of $39.9 billion, and an employer of around 210,000 people around the world, most of which are in the United States.

On the brink of collapse in 2009, GM filed for bankruptcy. It was thought at the time to be a gonner. Emerging from a government bailout, while the U.S. government still owns about one-quarter of the car maker, since then the company has bounced back to financial levels not seen since... well, ever. 

The car maker has pledged to claw back 10,000 previously outsourced jobs in its IT divisions over the next 3-5 years  in an attempt to "rebalance" its employment model, and only weeks later said it will continue to scale back on its outsourcing ventures, creating another 1,500 jobs in Michigan as it shifts its IT force back in-house .

But Republican presidential candidate Mitt Romney thinks otherwise.

In spite of what he's said, continues to say, or the amount of times you hear it on the radio or see it on television, GM is not outsourcing more jobs from the U.S. to China. 

In fact, the car maker is actually bringing jobs back to the United States. 

In a statement, GM Chrysler said that in spite of Romney's claim that the car maker would shift its Jeep production out of the U.S. to China, and a return-fire statement from GM Chrysler claiming that it wasn't true, it issued yet another statement which had to "unambiguously restate" its position for a second time:

Jeep production will not be moved from the United States to China.

ZDNet's Charlie Osborne, who moonlights on sister-site SmartPlanet, explained the situation: 

The problem is that Romney cited an article which said Chrysler wanted to build Jeeps in China, which is true. However, the candidate used the fact as evidence that all production would be moved from factories based in Detroit, Toledo and Belvidere, where the firm has created over 11,000 new U.S. jobs since 2009.

GM also criticized Romney for the comments, dubbing the advertisements as "cynical politics."

GM's decision to bring jobs back in-house highlights a trend of other firms, one that may pick up over time as companies begin to refocus their efforts on IT spending, not limited to Big Data and analytics. Every area of business, from non-techy and traditional shopping and retail stores, all the way through to technology giants, are increasingly relying on software and number crunching to work out quite simply what's going on

Caterpillar, Ford, and General Electric are all bringing jobs back to the States, even if it is just a "trickle," as Bloomberg Businessweek described it.

Explaining GM's move, MIT Technology Review spoke to Harvard Business School professor Alan MacCormack, an expert in product development management in the software sector, who said that outsourcing can carry risks for innovation-seeking companies. "Everybody can make a decent enough powertrain. But what differentiates you is what you can do with your software," hat-tipping car makers such as GM. "Companies have to be careful that they don't outsource the crown jewels."

The almost inconvenient truth is that outsourcing has become too expensive for many U.S. companies. In the words of GM chief executive Daniel Akerson: "GM's outsourced IT model was expensive, inefficient, and outmoded."

Something had to change. GM needed to change.

Was it something the government did? Was it something Obama personally spearheaded? Did GM decide to in-house its IT divisions because of a U.S. House Intelligence Committee report cried "beware, China"?

Not quite.

"GM will be focusing on automating much of the routine work and consolidating the company’s 23 data centers into two much larger, more efficient operations. The idea is that a much larger in-house staff, one that understands the auto industry, could eventually double the speed at which it delivers new software applications within its business and to other companies it works with," says MIT Technology Review's business editor Jessica Leber.

GM is alive and drawing jobs back into the U.S., thanks to a U.S. government bailout in 2009. Far from being a state-owned car maker, a relic of the Chinese present, the company continues to make independent decisions on its future and bolster its position at home and abroad.

Again: "What's good for General Motors is good for the country." It's certainly a sign of things to come, and considering how well GM is faring in the past four years, in retrospect the economy hasn't done so badly in its ongoing recovery. 

At a time when the economy balances on a knife-edge ready to plunge into a double-dip recession just as its closest cousin, the United Kingdom did earlier this year, the race for the White House rests on who can bring the economy back on the right track.

Self-proclaimed liberal and "Blairite," a follower of former British Prime Minister Tony Blair, columnist with The Telegraph of London, Dan Hodges summarizes the election in a single statement:

"Bin Laden's dead, General Motors is alive. That's about as existential as this election's going to get."

Image credit: Wikimedia Commons.

Topics: Outsourcing, IT Employment, IT Priorities

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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